Download This PaperEconomics with Market Liquidity Risk
Critical Finance Review, special issue on “Liquidity: Replications, Extensions, and Critique”, Forthcoming
15 Pages Posted: 14 Sep 2019
Date Written: September 6, 2019
Abstract
For markets to work efficiently, buyers and sellers must be able to transact easily. People must have access to a marketplace such as a supermarket or a stock exchange with adequate liquidity. Further, people must have confidence that such a well-functioning marketplace will also exist in the future. Market liquidity risk is the risk that the market will function poorly in the future, handcuffing the “invisible hand” through which markets produce allocative efficiency. We discuss the effects of market liquidity risk on asset pricing, investment management, corporate finance, banking, financial crises, macroeconomics, monetary policy, fiscal policy, and other economic areas.
Keywords: liquidity risk, asset pricing, financial crises, monetary policy, macroeconomics
JEL Classification: G01, G12, G20, G30, E00, E44, E52, D40
Suggested Citation: Suggested Citation
Viral V. Acharya
New York University (NYU) - Leonard N. Stern School of Business ( email )
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Suite 9-160
New York, NY NY 10012
United States
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HOME PAGE: http://www.stern.nyu.edu/~vacharya
New York University (NYU) - Department of Finance ( email )
Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States
European Corporate Governance Institute (ECGI) ( email )
c/o the Royal Academies of Belgium
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Belgium
